While keeping the policy rate unchanged at 0-0.25 percent as expected, the Fed announced that it will decrease by $15 billion as of the end of this month in its monthly asset purchase program of $120 billion. $10 billion of the said reduction will be made from Treasury bonds and $5 billion from mortgage-backed securities.
In the text of the resolution, it was stated that the Fed Open Market Committee (FOMC) thought it would be appropriate to apply similar cuts every month, but was ready to adjust the pace of purchases if changes in the economic outlook required it. "Supply and demand imbalances related to the epidemic and the reopening of the economy contributed to significant price increases in some sectors," the text said. assessment was included.
Making statements after the decision, Fed Chairman Jerome Powell stated that asset purchases are expected to end in the middle of next year, and said that if they have to change the rate of reduction, they will be transparent and will not surprise the markets. Emphasizing that the bank's decision to start reducing its asset purchases does not give a direct signal about its policy regarding interest rates, Powell said, "We think we can be patient about raising interest rates. We will not hesitate if a response is required to the developments in inflation." said.
Analysts said that the Fed changed its "temporary inflation" rhetoric to "inflation-related factors are expected to be temporary" and added flexibility to the reduction rate of asset purchases, but reduced uncertainties by emphasizing that communication on this issue would be open.
Pointing out that the message was given regarding the timing of the interest rate hike, which is closely followed by the markets, the analysts noted that the improvement in the employment market and wages could reach the last quarter of the next year, thus strengthening the expectations that interest rates will not be increased until then.
On the macroeconomic side, private sector employment in the USA increased by 571 thousand in October yesterday, exceeding market expectations. The Institute for Supply Management (ISM) service sector index in the country reached a record level of 66.7 in October, while factory orders increased by 0.2 percent in September, contrary to market expectations.
With these developments, a buying weighted course was followed in the New York stock market yesterday, while the Dow Jones index gained 0.29 percent, the S&P 500 index gained 0.65 percent and the Nasdaq index gained 1.04 percent, renewing their closing records. After the dollar index decreased by 0.3 percent yesterday and closed at 93.9, it is testing over 94 again today. The US 10-year bond yields rose from 1.52 percent yesterday and tested 1.61%, while today they are at 1.60 percent. It is noteworthy that the index futures contracts of the USA started today with a mixed course.
On the European side, the statements of the President of the European Central Bank (ECB) Christine Lagarde yesterday clearly closed the door to expectations of rate hikes in the next year. Stating that they clearly set out 3 conditions for increasing interest rates, Lagarde said, "Despite the current increase in inflation, the medium-term inflation outlook remains moderate and therefore it is very unlikely that all 3 prerequisites will be met in the coming year." said. Unemployment rate data announced yesterday in the Euro Zone decreased by 0.1 points to 7.4 percent in September compared to the previous month, while a mixed course was observed on the share markets side with these developments. While the DAX index in Germany increased by 0.03 percent and the CAC 40 index in France by 0.34 percent, the FTSE 100 index in the UK decreased by 0.36 percent. After closing at 1.1610 with an increase of 0.3 percent yesterday, the euro/dollar parity went down again to 1.1590 levels today. Index futures contracts in Europe, on the other hand, follow a mixed course.
Analysts stated today that the BoE's interest rate decision may be determinative on the direction of the markets, and although the expectations that the bank can raise the policy rate by 15 basis points to 0.25 percent after the statements made by BoE Chairman Andrew Bailey last week, the possibility of bypassing this month is also considered. He said it should not be ignored.
On the Asian side, Chinese Premier Li Keqiang noted growing concerns about the slowdown in growth, saying that preventive steps and policies need to be fine-tuned to overcome the challenges facing the economy. While the concerns about the debt rollovers of the leading companies operating in different sectors and the tightened epidemic measures in the country continue, it is noteworthy that the new day started with a buying-heavy course on the Asian stock markets after the Fed decisions. Close to the closing, Shanghai composite index increased by 0.7 percent in China, Nikkei 225 index in Japan increased by 0.8 percent, Hang Seng index in Hong Kong increased by 0.3 percent and Kospi index in South Korea increased by 0.5 percent.
On the commodity side, before the OPEC+ group meeting of the Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC producer countries to be held today, the barrel price of Brent oil decreased by 3.3 percent to $81, while it remains flat today. The ounce price of gold, on the other hand, is at the level of $ 1,775 with an increase of 0.3 percent, after falling by more than 1 percent to $ 1,769.6 yesterday.
Analysts stated that after the Fed's clear and strong communication, uncertainties regarding monetary policies decreased and this situation supported the risk appetite, and said that the impact of data and developments on the labor market, especially on the Fed's interest rate policy expectations, will increase in the coming period.
Stating that today, weekly money and bank statistics and real effective exchange rate in the domestic market, the BoE's interest rate decision and the results of the OPEC+ meeting, as well as the intense data agenda will be followed, the analysts said that, technically, the 1.550 and 1.570 levels in the BIST 100 index, the resistance, the 1.500 points. reported that he was in a position of support.
The data to be followed in the markets today are as follows:
10.00 Germany, factory orders for September
11.55 Germany, October service sector PMI
12.00 Eurozone, October service sector PMI
13.00 Euro Zone, September PPI
14.30 Turkey, October real effective exchange rate
14.30 Turkey, weekly money and bank statistics
15.00 UK, BoE's interest rate decision
15.30 US, weekly jobless claims
15.30 USA, September foreign trade balance
16.00 Speech by ECB President Lagarde
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